CVS, Rite Aid stop accepting Apple Pay

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Apple Pay launched in the US last week, and its apparent success is already breeding contempt: With no public explanation, both CVS and Rite Aid — huge US drugstore/pharmacy chains — have stopped accepting Apple Pay. The same block is also reportedly in place at Walmart and other big retailers. Both CVS and Rite Aid accepted Apple Pay when it first launched on Monday last week, but have since disabled NFC-based contactless payments on their stores. A leaked memo from Rite Aid says a consortium of US retailers is working on a mobile wallet solution, and presumably Apple Pay was disabled so that their own solution — called CurrentC — will stand more of a chance when it’s launched in 2015. Sometimes it just plain sucks to be a consumer.

Apple Pay is a mobile wallet for the iPhone 6 and 6 Plus that, by putting your finger on the Touch ID sensor, lets you pay for stuff via NFC (i.e. swiping your phone somewhere near a compatible NFC-enabled point-of-sale device). Outside the US, most point-of-sale devices have been upgraded to support contactless payments over the last few years — and now, with a concerted effort from Apple, MasterCard, Visa, and Amex, it seems US retailers are finally taking the plunge as well. Apple Pay finally launched on Monday last week, and except for a few minor teething issues it sounds like everything is going well — that is, until CVS and Rite Aid disabled contactless payments nationwide. Other large retailers, such as Walmart, Best Buy, and Gap, have reportedly also blocked Apple Pay.

Rite Aid Apple Pay blocked

If you try to use Apple Pay at Rite Aid, you’ll probably see the following message: “At this time Apple Pay is not accepted. Please swipe a card or provide another form of payment.” In a leaked memo, obtained by Slashgear, Rite Aid tells its employees why Apple Pay has been disabled:

Please note that we do not accept Apple Pay at this time. However we are currently working with a group of large retailers to develop a mobile wallet that allows for mobile payments attached to credit cards and bank accounts directly from a smart phone. We expect to have this feature available in the first half of 2015.

The “mobile wallet” that Rite Aid refers to is CurrentC, a system being developed by Walmart, Best Buy, CVS, Rite Aid, and other massive US retailers that does much the same thing as Apple Pay. There is one big difference, though: While Apple Pay is backed by the usual credit card providers (Visa, MasterCard, Amex), CurrentC is a standalone system, completely avoiding the credit card providers — and thus evading the dreaded 2-3% card processing fee that merchants must pay for every transaction.

It’s not hard to see why CVS and Rite Aid have disabled Apple Pay: As far as the retailers are concerned, Apple Pay is in direct competition to CurrentC. If Apple Pay gains enough market and mind share over the next few months then CurrentC doesn’t stand a chance when it arrives in the first half of 2015. In the eyes of the retailers, Apple Pay (not unfairly) represents a significant loss of profit.

Ultimately, of course, it is the consumer who will suffer the brunt of this spat. You could possibly argue that CurrentC is better for consumers, because the savings could be passed along to consumers — but in reality, CurrentC will probably just be used to better track your buying habits, with the retailers gushering hearty guffaws all the way to the bank.

With the negative press that CVS and Rite Aid are getting over their abolition of Apple Pay, it’ll be interesting to see whether it gets reinstated or not. If the entire CurrentC consortium sticks to its guns and Apple Pay is outlawed at stores like Walmart, Best Buy, and CVS — some of the largest chains in the US — then Apple’s nascent mobile wallet may struggle to gain widespread adoption.

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